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Philip Hammond launched a tax raid on the self-employed in his first Budget today and was accused of breaking a key Conservative manifesto pledge.

The Chancellor increased National Insurance payments for the self-employed – which the Tories promised repeatedly they would not do – and hit savers with a tax on dividend payments.

The two measures will raise a combined £4.6 billion for the Treasury. The announcements prompted an angry response from many Conservative MPs, with one former Cabinet minister suggesting Mr Hammond was taxing “work and enterprise and success”.

Jeremy Corbyn, the Labour leader, accused the Chancellor of “utter complacency” about the state of the economy while the Liberal Democrats said he had imposed a “tax on hard work” that would hit “builders, taxi drivers and window cleaners, some of Britain’s hardest-working people”.

Mr Hammond will increase National Insurance contributions by 2 per cent for self-employed people, which will add up to £1,000 to tax bills for 2.45 million entrepreneurs.

Another 2.2 million people, including 415,000 pensioners, will lose an average of £320 per person after the Chancellor lowered the tax threshold on share dividend payments from £5,000 to £2,000.

Mr Hammond delivers his BudgetCredit:
PA

The Chancellor said the measure was aimed at those who incorporate themselves as companies for tax reasons, but it will also have an impact on savers with investments in stocks worth more than £50,000 outside Isas.

Some will be pensioners who have taken advantage of new rules on pensions to withdraw their pension pots and invest the proceeds.

The extra money raised from the rise in NI for the self-employed will be partly offset by the loss of revenue from the abolition of Class 2 NI contributions – paid by those with smaller profits – in April 2018, meaning the net gain will be £145 million by 2021.

The pledge as it appeared on the Tory manifesto

The two new taxes were the centrepiece of the first Budget of Theresa May’s premiership in which Mr Hammond also announced major new investment in social care, measures to cut waiting times at accident and emergency wards, a package of investments in education and training, and help for working families in the form of additional free childcare.

The Chancellor also announced a £435 million package of handouts to help companies hit by controversial rises in business rates.

Tax on beer will go up by 3.9 per cent – the first rise in five years – while even the cheapest cigarettes will now attract a minimum duty of £5.37 per packet of 20.

Mr Hammond told MPs that the Budget provided “a strong and stable platform” for Mrs May’s coming negotiations with the EU and would help prepare Britain for “a brighter future... confident that our greatest achievements lie ahead of us”.

However, Mr Hammond did not at any point mention the word Brexit, and made little other mention of Britain leaving the EU.

Mr Hammond insisted the NI rise was justified because “a fair system ensures that those with the broadest shoulders bear the heaviest burden”.

The Conservatives also attacked Labour for wanting to increase National Insurance

He said it was only right that self-employed people who enjoy the same benefits from the state as employees should pay similar levels of tax.

On Wednesday night Tory MPs John Redwood and Andrew Tyrie, the chairman of the Treasury select committee, confronted Mr Hammond over the increase at a meeting of the party’s 1922 committee of backbenchers.

One MP at the meeting said there were “concerns about how it will play out”, describing the NI increase as a “chink in his armour”.

Mr Redwood said: “I don’t think we should be going out of our way to tax work, growth and enterprise and success.”

Iain Wright, the Labour MP for Hartlepool, described it as a “tax on enterprise”.

The Conservative MP Anna Soubry suggested Mr Hammond will be forced into a “U-turn” on dividend payments, adding: “This will not be popular and many will argue it’s unfair.”

Rupert Harrison, who was chief of staff to the former chancellor George Osborne, described the move as “very risky territory for a Conservative Chancellor with a small majority” and suggested it would be so unpopular that “we can rule out a snap election”.